Keep Cash Flowing With Active Retainer Management

Getting an evergreen retainer is a common tactic used by attorneys to ensure there is money available from the client when invoices come due. However some law firms don’t manage their retainers and when the funds run out, they have to bill clients and wait for their money. Version 1.5 of the CosmoLex cloud-based legal billing system has added low retainer reminders to simplify your retainer management needs.

How To Manage Retainers

The first step is to secure a retainer from the client. How much? That is the subject of much debate but a good rule of thumb is enough to cover your services for the next two months. For small cases this might simply be the entire fee. Once the retainer is received it should be placed in a trust account since the money is not yours until you have earned it through fees.

Each month when you do your billing, you will take your fees from the retainer and transfer them to your operating account. However you will still send an invoice to the client so they can see how much was charged, and can see the new retainer balance. This integration between billing and trust account management is why you need a billing solution that integrates trust fund software rather than trying track invoicing and retainer management separately.

Replenishing Evergreen Retainers

It is important to keep the well from running dry, and yet too many law firms don’t follow up with clients to request replenishment funds. Don’t wait until the retainer has run out. As soon as the fund has fallen below some pre-determined amount, and that amount will be up to you, request additional funds right away. That gives the client time to send you payment and for the payment to be deposited without affecting your practice’s cash flow.

CosmoLex allows you to send all outstanding retainer replenishment requests with one click. From the Matter section, click on Actions and then Low Retainer Reminder(s). A dialog will pop up showing all retainers that are below the required threshold, which is specified for each matter individually. You can round replenishments up to the nearest $100 by checking the indicated box, and can filter the list so it shows only retainers with replenishments over the amount you specify. Check the retainers you want to replenish, or check the box at the top to select them all, and then click Email. That’s it. The replenishment requests have been sent.

This kind of easy functionality is a core design philosophy of CosmoLex law office management software. If you aren’t a CosmoLex user, register now and start using the software right away.

Rick Kabra

Dr. Rick Kabra is President of CosmoLex Cloud, creator of cutting-edge technology solutions to help solo and small law firms law firms. Rick has a Ph.D. in Electrical Engineering from NJIT and has over 13 years of experience in the legal software industry catering to the specialized technology needs of small to mid-sized law firms. Rick has given numerous seminars and published articles on legal technologies such as law practice technology management, cloud computing, and legal billing, business & trust accounting compliance.

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CosmoLex is cloud-based law practice management software that integrates trust & business accounting, time tracking, billing, email & document management, and tasks & calendaring, in a single application.

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